Archive for: ‘September 2014’

Simple Ways for Investing in Mutual Funds

September 10, 2014 Posted by admin

Mutual funds are something that almost everyone has at least heard about as a way to increase your cash. And this is why it is one of the very popular instruments used for investing. But there are some important steps you need to go through, before you can start investing in mutual funds. These steps are simple enough – sort out both your finance and your goals. This will help you to understand how much money you have now and how much you want to have in a given period of time. It’s always better to differentiate your goals as being short-term or long-term. But once this is done, you’re probably stumped about what to do. How do you proceed to actually investing your money? There are different ways you can use. The first, and usually the most convenient, way of investing is through an agent.

You’ll find that there are mutual fund agents who invest your money in return for a commission. Usually, the commission they charge is a certain percentage of your investment amount. But when you’re employing an agent, just make sure that you’re the one filling out necessary forms; also make sure you get sound advice from the agent. Considering agents do help to make the whole investment process paperwork go faster, and also can give you sound advice about the best mutual fund to invest in, it’s one of the best ways that you can use to invest. Certainly, it is the most convenient and hassle-free way used to invest. Another way is to use asset management companies. These are basically companies that help to invest your money wisely. In exchange, you’re going to have to pay a certain management fee towards the company.

Most of the Asset Management Companies allow you to buy mutual funds online as well, which can be quite convenient. You need only visit the Asset Management Company for the first investment and get your portfolio number, after which you can easily start investing online. You might find the first visit and related paperwork to be a chore when you first sign up, but once you start using it online, you’ll find that things go along more smoothly. This is the best way to invest if you’re going to be investing large amounts, because a share of your investment isn’t eaten up by way of commissions. The problem you will face is that you’ll be doing all of it yourself – there isn’t someone who will be doing the work for you.

How Does Mutual Fund Work. A Simplified Version

September 8, 2014 Posted by admin

Instead of directly investing in stocks or fixed deposits you can use the mutual funds route to invest in them.
A mutual fund is an investment scheme launched by a company called Asset Management Company. Examples of asset management companies are ICICI Prudential Asset Management Company, SBI Funds Management Private Limited etc. There are about 45 asset management companies in India.

Asset management companies will have experts in their team. This team of experts will create a list of shares or bonds that are expected to do well. The list typically will have 15-20 shares/securities. This list is known as mutual fund scheme. Each mutual fund scheme will have a manager and he is called the fund manager. Example of fund managers is Prashant Jain and he manages the mutual fund scheme called HDFC top 200 and HDFC Equity Fund.

All you need to do is choose suitable schemes offered by the asset management companies, fill up a form and write a cheque. They then will invest your money proportionately in all the 15-20 shares/ securities specified in the mutual fund scheme. You will get a folio number (account number) and periodic statements.

You have no role to play in stock picking. The fund managers themselves will decide which stock they need to buy and how much they need to pick. At the end of every month they will publish the performance of the fund and provide the list of stocks they have invested in. This information is called as fact sheet.

For managing funds on your behalf they charge annual fund management fees The fund management fee varies from 1% to 2.5% every year. The management fee is directly charged from your investments. The management fees covers all the costs of the asset management company including salaries, office rent and maintenance, advertisement, distribution, servicing etc. They will charge fund management fees irrespective of whether the scheme makes money or not.

Whenever you want your money back fill up a form and you will get your money back within 4-5 days.

Now, you may want to know what will happen if the asset management company closes down? Ok, just remember the money which you give them actually goes to a trust and you are the unit holders of that trust. So even if the AMC closes down, the money is lying in the trust a/c and does not go in their pocket. In fact you can be rest assured that mutual funds are very well regulated by SEBI in India.

Liquid Funds – A Flexible Mutual Funds Investment Type

September 5, 2014 Posted by admin

Is your cash lying idle? Do you want to invest it and earn a return on it? But you might need it anytime shortly. How can you invest and gain returns out of it? If you have no clue how to go about it, and yet want to find a way out, then you should invest it in ‘Liquid Funds’. If you know it, great you can begin now by opting for an online investment option with an Asset Management Company like

Reliance Mutual Funds, which offers 3 types of liquid fund schemes, each of which has a minimum lock-in period of 1 day. And for those who know not what it is, here’s an introduction:

What are liquid funds?

As the name suggests, these are funds that are highly tradable and can easily be converted into cash. It refers to those assets that are good at marketability and can easily be bought or sold.These are also called debt funds and considered to be as good as hard cash. Ensuring high degree of liquidity and minimalizing the volatility,these investments are invested into securities that have residual maturity of less than or equal to 91 days. Since, these are best suited for investments that can be required to redeem at a short notice, which can be as less as 24 hours, and thus most of these funds do not have any exit load.

What are liquid funds composed of or invested in?

Liquid funds are invested into debt or money market securities such as treasury bills, certificate of deposits and commercial papers. The minimum investment size invested in liquid
fund schemes may however vary from scheme to scheme offered by various investment banks.

What are the tax benefits when investing in liquid funds?

Tax is applicable on short-term capital gains from liquid funds according to whatever tax slab you fall in, but in case you fall in the highest tax bracket, larger chunk of your returns would be wiped out. But, when you opt for dividend option the returns are tax-free in the hands of investor, which further can be considered to be reinvested when investing in liquid funds because dividend stripped will be reinvested as units and will be considered as fresh investments.

So clearly, some of the key features are:

– Good liquidity
– Less sensitive to interest rate fluctuations
– No entry or exit load
– Decent return on investment between 5-8%
– Annual fee is low and ranges between 0.30 to 0.70 %
– Minimum investment range is Rs. 25,000 to a lakh.
– Short tenure for parking funds
– Dependent on market performance

Once you have analyzed your finances regarding where and how much, and for how long to invest, you can easily choose amongst liquid funds and other mutual fund types. Money is yours and so is investment, see what suits your money management. And in the course if you happen to feel confused or unclear on matters of mutual funds, get in touch with your fund manager at Reliance Mutual Fund for an expert advice.

Why You Should Invest in Equity Mutual Funds

September 4, 2014 Posted by admin

Simple Guide for Investing in Mutual Funds Vs. StocksMutual funds, like any financial instrument, come in several variations. One of these is an equity fund. By definition, The mutual funds are those which invest principally in stocks. Equity mutual funds invest collated amounts of money in the stocks of private companies, which represent the investors holding or equity in the total stock of the company. Equity funds can be a gamble, no doubt, but their rising popularity is due to five specific benefits that trump other investment avenues.

For starters, equity funds enable significant diversification of the investor’s portfolio even with small amounts of money. In other investment avenues, such as fixed deposits, one cannot expand their portfolio very aggressively if one does not have a large amount of money to begin with. In equity mutual funds, however, one can pick out the stocks they can or cannot afford, thereby allocating their investments appropriately while simultaneously diversifying their investment portfolio. The required investment amounts for some funds can be as low as Rs. 500.

Equity funds also come with the added bonus of professional management services. Fund managers come highly qualified and work to bring you maximum returns on your investment. They do this by consistently tracking market activities and looking for favorable investment channels. With their professional experience and familiarity with the economic sectors, a fund manager can work wonders for client’s portfolios.

These funds come with several tax benefits. For example, the dividend or returns that the investor will receive on his equity shares are non-taxable, whereas in case on non-equity funds, investors may be required to pay a dividend distribution tax of approximately 13% out of their own pockets.

If what you are looking for is liquidity, then investing in it will prove to be highly convenient. Unlike fixed deposits or even debt funds, where the principal amount of the investment must be retained with the institution concerned, equity shares can be bought or sold on any given business day, which makes your investment accessible to you at all times. Moreover, there are no penalties levied on or damages suffered by your investment in the case of an equity mutual fund.

Brokerage commissions, bank fees, capital gains tax… these are all expenditures one can save on. The more you save, the richer one gets. By initiating equity investments in an account opened directly with the mutual fund, one avoids these payments altogether. Over time, these benefits can be very substantial. What’s more, one can even reinvest them for added returns.

How to Invest in Mutual Funds

September 4, 2014 Posted by admin

In today’s world, every day is a rush to get to our nine to five jobs. We struggle with a variety of decisions, ranging from the inconsequential to the important. We hurtle through our lives at breakneck speeds, trying to do everything that we possibly can, in an impossibly short span of time. In such situations, it becomes necessary to have something that you can fall back on in case of unforeseen events. An amount from our savings does need to be put away for rainy days. Investing has hence become a vital part of life. So how exactly do we invest?

For a wide percentage of the present working population, mutual funds are the best investment option. The investor avails of professional expertise with a reasonable starting amount. Once this amount is paid, the investor can purchase securities in any denomination he or she wishes to. The diversification mutual funds offer, by providing a wide range of options in their investing portfolios, allows the investor to minimize his risks in case of mishaps. Mutual funds also provide easy liquidity, giving you instant access to your money in times of need. Having established that mutual funds are the most viable investment choice, how do we go about investing in them?

Before taking action and actually investing, there are a series of decisions that a potential investor must make. The first and most important is the amount of money that he or she is willing to put down. For this, it is important that the investor take stock of all their assets and savings. The next is deciding the kind of returns one expects and at which stage in their life, along with the risks they are prepared to take. Most ‘to be’ investors need to take into account that their standard of living might change depending on the investments they make and the returns they expect. The outcome of this question affects the last step of investment planning, which is what kind of mutual fund does one invest in.

Professional help can be sought to make this decision. A wide range of mutual funds exist and can be differentiated according to maturity (open ended and close ended), investment objectives (equity, debt income, etc), index funds or other variables. Investment planning ends with picking not only the best fund available but also one that can be tailored to your individual needs.

The actual investing process has become an easy and accessible one. It can be done in person as well as on online platforms, meaning investments can be made from one’s cell phone as well. While investing online, a person can visit the website of the fund that he or she has chosen. After being registered and providing the necessary details (for e.g. the portfolio number or email id), they are sent a pin number with which they can log in and simply start investing. The other and more indirect option is to personally visit an agent or distribute. After filling an application form and possibly supplying a demand draft for the necessary amount, the agent registers you with the mutual fund you want to invest in. Investing in mutual funds has therefore become simple.